Why Millennials Should Open a Demat Account

As millennials born between 1981 and 1996 enter their 30s, many achieve growing career stability and earnings potential. Reaching this stage often allows for disposable income that can be invested – providing a prime opportunity to build wealth through the coming decades. With this excellent financial stability, now can be an optimal time to map out long-term money plans. 

Millennials start their investment portfolios for several reasons, including harnessing early investing benefits, aligning investments to life goals, capitalising on youth’s higher risk appetite, cultivating investing discipline, leveraging technology when investing, choosing investments per their values, and taking advantage of retirement benefits offered by employers. 

Starting now allows your investments sufficient time for compound growth in service of future needs. Opening a demat account also lets you participate in promising upcoming IPO, meaning you can invest in companies with strong growth potential right as they first enter the stock market.

Why Millennials Should Consider Opening a Demat Account

As a millennial starting your wealth creation journey, demat account opening unlocks multiple benefits that can accelerate your investments and financial independence.

1. Harness the Power of Early Investing

By investing early, millennials can leverage the benefit of extended time horizons until retirement (20-30 years) and let compounding work its magic. Even small, regular investments can accumulate substantial corpus over such long periods.

Starting to put money into investments like mutual funds or stocks in your 20s or early 30s gives that cash decades to grow through market returns. The earlier you begin investing, the more time compound growth has to build your nest egg.

Even modest monthly SIPs of ₹3,000-₹5,000 started today and continued till age 60 can grow to large sums owing to compounding over 30+ years. The key is consistency. Small, regular investments in a demat account started early on harness time and compounding best.

2. Align Investments to Major Life Goals

Major future expenses like a home purchase, overseas education for kids, weddings or early retirement need planning. Investing specifically for such goals via the demat account route helps build the required corpus.

Appropriate investments can be planned today based on the amount needed and years available for different goals—paying your child’s foreign university fee 15 years later or buying your dream retirement home.

A demat account allows you to invest in assets to achieve short, medium-conscious, and long-term life milestones. When goals are quantified and investments set aside, you remain focused and motivated to achieve them.

3. Capitalise on the High-Risk Appetite of Youth

When young, you likely have a higher tolerance for investment risk and can use some volatility to your benefit by investing adequately in equities via mutual funds and stocks. Time is also on your side to ride out short-term ups and downs.

Your 20s and 30s are best suited for higher allocation to potentially riskier but higher-return asset classes like small-cap mutual funds and growth-oriented sectors. 

4. Cultivate Good Investing Habits Early

Consistently investing surplus income builds investing discipline and allows rupee cost averaging into assets like equity mutual funds. Online investing platforms with demat accounts make regular investments convenient.

Cultivating the discipline to save and invest a portion of your income monthly or quarterly goes a long way toward wealth creation. When inculcated early on, this habit becomes ingrained, and investing becomes a way of life rather than a chore.

Moreover, demat accounts today enable seamless automated investing. You can set up Systematic Investment Plans (SIPs) across multiple mutual funds or set stock purchase triggers to make disciplined investing smooth.

5. Leverage Technology When Investing 

Opening a demat account with fintech brokers allows access to modern platforms and apps designed specifically for convenient investing. You can analyse investments, execute trades, and manage portfolios seamlessly via mobile apps. Technology makes investing accessible on the go. You can quickly start SIPs, rebalance your portfolio, or book profits with a few clicks, even while travelling. Over time, such tools can nurture disciplined investing habits.

6. Choose Investments as per Your Values 

Today’s DIY investing platforms allow you greater control in aligning investments to personal values beyond just returns. You can invest in mutual funds explicitly focused on environmentally conscious companies or firms promoting gender equality, for instance.

Stocks also allow you to analyse businesses and invest only in companies reflecting your values. Having your demat account facilitates investing per your principles instead of relying solely on distributor-driven products.

7. Take Advantage of Retirement Benefits

Many corporate sector employees must benefit from matching employer contributions to retirement accounts like EPF and NPS. Leading companies today contribute up to 10-12% of your basic salary into these accounts annually if you make equal employee contributions. 

However, there is a salary threshold beyond which employer contribution stops. Starting retirement savings early when your salary is under this threshold maximises this free retirement money benefit throughout your career, allowing compounding to accrue substantial sums by retirement age.

8. Learn Investing in a Risk-Protected Environment

For first-time equity investors, the risk of losing hard-earned money while learning can be daunting. However, reputed online brokers now offer virtual practice environments for hands-on investing education without actual money loss risk. 

Using actual market data and prices, you get virtual cash to trade and invest in stocks and mutual funds. The virtual portfolios and activities mimic the actual account experience. You can test strategies, track investments and learn intricacies for months before investing real money. Such tools allow millennials to self-educate about equity investing in a risk-free setting.

Conclusion

Millennials benefit significantly from leveraging the demat account route for long-term wealth creation. You can conveniently invest in well-regulated assets like stocks and mutual funds, align investments to life goals, take advantage of youth’s high-risk appetite, and invest according to your values.

So don’t wait any longer—take charge of your finances by opening your demat account.